Max Schulz of the Manhattan Institute has a great piece on National Review Online highlighting the folly of President Bush’s call yesterday for more government regulations and mandates that would “solve” our energy problems by pushing up the price of our food:
By artificially creating a demand for ethanol where none before existed, the original renewable-fuels standard has already helped drive up food prices. As the Associated Press wrote back in March, “People don’t eat the kind of corn that makes ethanol, but cows, pigs and chickens do. And people eat other grains that will become less plentiful as farmers plant more corn. Demand for ethanol is pushing feed prices higher and enticing farmers to switch from other crops.” The prices of chicken and eggs have gone up roughly 15 percent since the mandate kicked in last year. The price of corn syrup has jumped, too, meaning higher prices for everything from bread and ketchup and Coca-Cola to infant formula and frozen foods.
…The question is whether those higher prices are worth it. After all of the mandates and artificially increased demand and the government subsidies, will this plan substantially provide for American energy security? Doubtful. A 20-percent reduction in gasoline consumption, even if it could be achieved (a very big “if”), would still leave us looking to oil for the bulk of our transportation fuels. That hardly sounds like directions to fundamentally curb appetites for a product President Bush condemns for its alleged addictiveness. Whether we hit the president’s 20-in10 goal or not, we’ll be relying on oil — from the Middle East and elsewhere– for as long as anyone can legitimately guess.
The Independent Women’s Forum has been arguing against such government mandates as the wrong direction in energy policy. It’s time for President Bush and Members of Congress to stop pretending that any politician or set of policy can costlessly lower fuel prices or reduce our dependence on foreign oil. The most promising policies in the long-term are those that head in the opposite direction by reducing government mandates and letting the free market work.